3 Reasons ASCs Should Use a Single-Source Supplier

In today's cost-conscious, value-based healthcare system, demand for Ambulatory Surgery Centers (ASCs) continues to rise.

According to a 2019 MedPAC report, the number of ASCs grew 2.4 percent from 2016 to 2017, up from 1.1 percent in previous years.1 ASC volume increased as well—about 1 percent faster than in hospital outpatient departments.

While a surge in patient volume is good for revenue, it also means higher ambulatory supply costs. VMG Health data indicate about 24 percent of ASC net operating revenue goes toward drug and medical supply costs—roughly the same amount as salary and benefits.2

Many ASCs have realized considerable supply chain savings by shifting all or part of their inventory to a single-source supplier. Here are a few advantages of going the single-source route, as well as tips on how to find a single-source supplier that suits your business.

Greater Efficiency. Ordering from one supplier means materials managers spend less time ordering and more time managing operations. Supply chain software, which varies by vendor, allows managers to allocate every supply to a case. With all supplies tracked, materials managers can review data and find ways to save.

The right single-source supplier can also help streamline shipping. The Surgery Center at Mississippi Sports Medicine, a 60,000 square-foot facility in Flowood, Mississippi, puts the patient first by providing access to everything they might need through their whole episode of care. The ASC created a one-stop shop, bringing the surgery center, 23-hour care suites, imaging, physical therapy and pharmacy under one roof.

To support its mission, the facility uses Cardinal Health's OptiFreight Logistics freight management system. "They work with dozens of vendors," says administrator Meredith Warf. "Everything comes in one truck, so we save on shipping. It's a good value-add we can access through our relationship with Cardinal Health."

Superior Customer Service. When ASCs work with one vendor, they develop a close relationship with that vendor that benefits both companies in numerous ways. The materials manager at the Surgery Center at Mississippi Sports Medicine, Jessica Metz, talks daily with a representative from Cardinal Health, the ASC's single-source surgical supplier. “It's nice to have one person devoted to you, your storage, and your efficiency," says Warf. “They helped us set up a barcode scanning system and came out to our facility to train us on its software. To have that one-on-one is really important."

An established supplier relationship also allows for greater flexibility in product ordering and shipping, leading to significant cost savings. Depending on patient volume, the Surgery Center may need product delivered three times a week or daily.

Because of its relationship with Cardinal Health, Warf says the Surgery Center has navigated the lack of PPE equipment better than some. “That established relationship is a true benefit in times of shortages," she says.

Reduced Waste. Warf says the Surgery Center recently uncovered significant savings after an annual custom pack utility review with Cardinal Health consultants. During that review, the team analyzed every pack, eliminating items no longer needed. Absent Cardinal's help, Warf says it would be nearly impossible to conduct a detailed pack review. “Imagine getting all the staff and doctors together to do a thorough pack review," she says.

Cardinal Health also helped the Surgery Center evaluate its group purchasing organization's pricing and its arrangements with other suppliers. “Our GPO rep and the Cardinal rep work together to review new products on the market and to access any new deals that come up," says Warf.

What to Look for in a Single-Source Supplier

While many medical-surgical supply companies want to be your single source, not all suppliers have the capability to do so. Here are a few questions to ask when evaluating suppliers.

  • Do they manufacture their own brand? A value brand can yield significant cost savings compared to name brand products without any compromise in quality.
  • Do they offer volume discounts, an incentive program or rebates?
  • Will they provide a dedicated account rep?
  • Do they think ahead? A phone call alerting you to an upcoming recall helps mitigate possible shortages.
  • Do they offer flexible, fast shipping?
  • Will they respond quickly when you have a problem or an order change?

“ASCs are all about reducing cost," says Warf. “We need access to supplies, but we can't have excess inventory sitting on the shelf. Having a supplier we can count on is an important component to our business."

To learn more about how Cardinal Health can support your ASC, visit cardinalhealth.com/surgerycenters.

 

1The Medicare Payment Advisory Commission (MedPac). “Report to the Congress: Medicare Payment Policy," Chapter 5, Ambulatory surgical center services. March 2019.

2VMG Holdings LLC. “VMG Health 2018 Multi-Specialty ASC Benchmarking Study" 2018.

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